# EUR-Lex - 52013DC0442 - EN

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# 52013DC0442

**REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS On the implementation of the Raw Materials Initiative /* COM/2013/0442 final */**

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REPORT FROM THE COMMISSION TO THE
EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE
AND THE COMMITTEE OF THE REGIONS

On the implementation of the Raw Materials
Initiative

1.           Background

In the Commission Communication of 4 November
2008 "The raw materials initiative – meeting our critical needs for growth
and jobs in Europe" (COM(2008)0699) and in the Communication of 2 February
2011 "Tackling the challenges in commodity markets and on raw
materials" (COM (2011)0025, hereinafter the 2011 Communication) the
Commission recognized that securing reliable and undistorted access to raw
materials is an important factor for the EU's competitiveness. The
Communications launched and respectively reinforced the Raw Materials
Initiative (RMI), an integrated strategy aimed at responding to different
challenges related to access to non-energy and non-agricultural raw materials.
The Raw Materials Initiative is based on three pillars: (1) ensuring a
level-playing field in access to resources in third countries; (2) fostering a sustainable
supply of raw materials from European sources; and (3) boosting resource
efficiency and recycling.

The Council endorsed the reinforced Raw
Materials Initiative in its Conclusions on tackling the challenges on raw
materials and in commodity markets of 10 March 2011.

The European Parliament also endorsed the
strategy in its Resolution of 13 September 2011. In the Report on an effective
raw materials strategy for Europe (2011/2056(INI) the European Parliament asked
to be regularly informed on the development of non-energy raw materials in the
framework of the RMI and on the fulfilment of the latter’s objectives via an
annual progress report, also focusing on policy coherence with regard to trade,
development and environmental policies and social impacts, as well as data on Critical
Raw Materials (CRM).

The Commission adopted its Common Position on
this Resolution on 7 December 2011.

In line with the above, the aim of this report is
to present the current state of play with respect to the implementation of the
Raw Materials Initiative and provide an overview of the ongoing initiatives
while highlighting the joint interest for the EU and third countries rich in
raw materials to work in partnership.

2.           Critical raw materials

In June 2010 the Commission published an expert
report, which established a methodology for the identification of raw materials
deemed critical to the EU. The assessment was based on a quantitative
methodology using the criteria of economic importance, supply risk and
environmental country risk. Supply risk included components such as political
and economic stability, level of production concentration, potential for
substitution and recycling rate. Forty-one materials were evaluated based on
this methodology. The report put forward a list of fourteen critical raw
materials: antimony, beryllium, cobalt, fluorspar, gallium, germanium,
graphite, indium, magnesium, niobium, platinum group metals, rare earth
elements, tantalum and tungsten.

The critical raw materials list has proven
successful in serving as a tool to raise attention of policy-makers, promote co-ordination
of national policies regarding mineral supply and critical materials, challenge
trade distortive measures regarding critical raw materials, analyse the
functioning of the markets, promote research (exploration, substitution,
recycling) as well as promote access to deposits in the EU, address problems of
illegal exports end-of-life products containing critical materials and
undertaking measures for specific materials.

In its 2011 Communication the Commission
formally adopted this list and proposed that it will monitor the issues of
critical raw materials to identify priority actions, examine them with Members
States and stakeholders and regularly update the list of critical raw materials
at least every 3 years.

In order to revise the list of critical raw
materials by the first half of 2014, and to take into account inputs and
recommendations from the public consultation and EP Report, the Commission
services has contracted a study. The study will aim at collecting data on the above-mentioned
materials needed to calculate criticality; gathering data and analysing the supply
chain (interaction and associated risks) and identifying potential bottlenecks
with special attention paid to the specific situation of by-products;
developing supply and demand scenarios; examining the potential of refining the
well-functioning methodology without "altering" it and gathering
related data; examining the application of the methodology to wood and natural
rubber; as well as calculating and determining the critical raw materials list
and formulating recommendations.

The following raw materials are to be examined
within this review: the current list of 14 critical raw materials; selected
“nearly critical raw materials”, such as rhenium and tellurium notably
identified during the initial exercise; selected additional materials, such as
hafnium, selenium and tin (as in line with new sources, such as the 2011 JRC Report[1] on “Critical Metals in strategic
energy technologies”), wood and natural rubber that was added in the scope of
the RMI by the Commission's 2011 Communication.

The process will be accompanied by an ad hoc
steering group on critical raw materials selected for the first assessment of
critical raw materials in 2010 from within the Commission's Raw Materials
Supply Group.

The Commission plans to issue a report to the
European Parliament and the Council on the review of the critical raw materials
list by the end of 2013.

3.           Stockpiling

In the Commission's 2011 Communication the
Commission announced that it was "ready to examine with Member States and
industry the added value and feasibility of a possible stockpiling programme of
raw materials".

In order to explore the option of stockpiling,
the Commission services contracted a study to carry out a preliminary
assessment which analysed different stockpiling policies and practices,
including the EU stockpiling programme for oil, examined the current raw
material stockpiling schemes employed worldwide and examined the potential
costs and benefits of a stockpiling programme of critical raw materials. The
independent study considered as a valid option the possibility to organise a
voluntary stockpiling scheme by the industry with public financial support. It
also recognises that stockpiling can only solve short-term problems whereas
long-term shortage of raw materials requires structural solutions with regards
to supply (substitution, recycling, domestic extraction). Stockpiling is also
an instrument lacking flexibility as volumes cannot be adjusted quickly and the
cost of its implementation is substantial. Moreover, stockpiling would require
a perfect knowledge of value chains and the uses of each raw material as well
as processing facilities (if these facilities are not themselves guaranteed
there is not much point in stockpiling). Stakeholders' opinion on stockpiling
is also much divided. The results of the study were discussed with the
Commission's Raw Materials Supply Group in November 2012 and the reactions on
the potential stockpiling programme were negative. No Member State would
support a stockpiling scheme as a policy option.

The Commission will continue to monitor this
issue.

4.           European Innovation partnership on raw
materials

Innovation in raw materials can be a key driver
for progress within each of the three pillars of the Raw Materials Strategy and
should be applied across the entire value chain. Within the Europe 2020
Flagship on Innovation Union, the Commission is launching different
partnerships covering various challenges of relevance for our societies. In the
2011 Communication the Commission announced its intention to assess whether to
launch an Innovation Partnership on raw materials within the Europe 2020
Flagship on Innovation Union. The European Parliament called upon the
Commission to launch the European Innovation Partnership (EIP) on raw materials
in its resolution of 13 September 2011.

On 29 February 2012 the Commission therefore adopted
a Communication proposing the EIP on raw materials[2] (hereinafter the EIP
Communication).

The Competitiveness Council endorsed this
proposal on 11 October 2012 in its Conclusions and invited the Commission to
launch the Raw Materials EIP and to develop and finalise the Strategic
Implementation Plan by the end of 2013.

The EIP will aim to provide Europe with enough
flexibility and alternatives in the supply of important raw materials, whilst
taking into account the importance of mitigating the negative environmental
impacts of some materials during their life cycle. The EIP will address all
stages of the value chain, from exploration, extraction, via processing, to
recovery and recycling as well as innovations in the area of substitution. One
of its concrete targets is actually to support up to ten innovative pilot
actions / demonstration plants in the various sectors of the value chain. The EIP
is not a funding instrument, but it will bring the different actors together to
come up with appropriate technical and non-technical solutions to bring
innovation to the market. Its objective will be to push Europe to the forefront
in exploration, extraction, processing, recycling and substitution by 2020.
This EIP will bring together Member States and other stakeholders. The
Commission has foreseen five work packages, which will cover technological but
also non-technological working areas (e.g. framework conditions,
standardisation, knowledge and skills, public procurement) and a work package
on international co-operation.

A number of concrete targets should be achieved
by the EIP by 2020:

–
Setting up to 10 innovative pilot actions, e.g.
demonstration pilot plants on exploration, mining, processing, collecting and
recycling

–
Finding substitutes for at least three applications
of critical raw materials

–
Setting up a network of Research, Education and
Training Centres on sustainable raw materials management

–
Using EU standardised instruments for the survey
of resources/reserves and 3-D geological map

–
Ensuring dynamic modelling of trends: link
demand and supply with reserves and complete life cycle assessment

–
Ensuring a pro-active European strategy at
bilateral and multilateral level

With regards to the governance structure, the
High Level Steering Group is assisted by its Sherpa group, and with the
technical support of operational groups, will start developing the
Partnership's Strategic Implementation Plan (SIP). The objective will be to
develop the SIP by July 2013 so as to start its implementation as soon as
possible. The SIP will be followed by a Commission Communication in September
2013 which inter-alia will put forward the Commission support to the EIP, e.g.
in terms of research and innovation funding priorities, regulatory and policy
framework.

5.           Fair and sustainable supply of raw
materials from global markets (Pillar 1)

5.1.        EU Trade Strategy for Raw
Materials

In the 2011 Communication the Commission
committed to reinforcing its Raw Materials Trade Strategy in line with
development and good governance objectives. The Commission considered it
should:

–
continue to develop bilateral thematic raw
materials dialogues with all relevant partners, and strengthen ongoing debates
in pluri– and multi-lateral forums (including e.g. G20, UNCTAD, WTO, OECD);
carry out further studies to provide a better understanding of the impact of
export restrictions on raw materials markets, and foster a dialogue about their
use as a policy tool.

–
further embed raw materials issues, such as
export restrictions and investment aspects, in ongoing and future EU trade
negotiations in bilateral, pluri-lateral and multilateral frameworks.

–
pursue the establishment of a monitoring
mechanism for export restrictions that hamper the sustainable supply of raw
materials, and will continue to tackle barriers distorting the raw materials or
downstream markets with dialogue as the preferred approach, but using dispute
settlement where justified.

–
encourage within the OECD, activities the
inclusion of relevant non-OECD members in the work on raw materials, and
explore further multilateral and pluri-lateral disciplines including
consideration of best practice.

–
use competition policy instruments to ensure
that the supply of raw materials is not distorted by anti-competitive
agreements, mergers or unilateral actions by the companies involved.

–
take forward the above-mentioned actions, and
further analyse priorities for raw materials in relation to third countries
through autonomous measures, bilateral and multilateral frameworks and
dialogue; and continue to pursue a consistent EU trade policy on these
priorities.

–
the trade-related raw material policy
commitments of the RMI have been implemented through inclusion of rules in
agreements to achieve sustainable supply of raw materials at multilateral and
bilateral level, including WTO accession negotiations and Free Trade Agreements
(FTAs). Other important actions were focusing on WTO enforcement activities
notably in relation to the successful activities as pursued under the WTO
dispute settlement case on export restrictions against China's measures on raw
materials.

–
effective action has been taken resulting in
provisions in a large number of agreements. The Commission concluded or agreed
on the text of disciplines on export duties in FTAs with Colombia, Peru, and
Ukraine and in an Association Agreement with Central America. In these
agreements, the EU managed to obtain a horizontal ban of both existing and
future export duties while allowing for certain transition periods or limited
exceptions. Bilateral negotiations are on-going with a number of trade partners
including Canada, India, Malaysia, Mercosur and Singapore. In some
negotiations, provisions on investment protection are tabled, which are in
particular relevant to the extractive industry.

Moreover, raw materials were addressed
through trade provisions in the negotiations of Partnership and Co-operation
Agreements, which were concluded with Mongolia in 2010 and launched with
Australia, Kazakhstan and Russia.

In line with the Cotonou Agreement's
objective to support deeper regional integration, modernise our economic
relationship and use trade to boost economic growth, as recalled in the
recently adopted Communication "Trade, growth and development – tailoring
trade and investment policy for those countries most in need"[3], the EU started negotiations
with African, Caribbean and Pacific countries in 2002 to conclude Economic
Partnership Agreements. Negotiations, including on raw materials provisions,
continue with all regions duly taking into account the objectives of the development
partners.

As regards negotiations in the WTO in the
context of Russia's WTO accession negotiations (completed at the end of 2011),
the Commission in addition to commitments undertaken on existing export duties
as part of the accession protocol, secured an additional agreement not to
resort to export duties on a large number of raw materials. WTO accession
negotiations are on-going with Kazakhstan.

There was the successful launch and
conclusion of a WTO dispute settlement case against export restrictive measures
applied by China on nine raw materials in violation of WTO commitments. The
Appellate Body confirmed the ruling of the panel in January 2012, giving a
clear and final interpretation of China's commitments under the WTO. On 13
March 2012, the EU launched a second challenge of China’s export restrictions
on raw materials including 17 rare earths, tungsten and molybdenum.

A number of outreach activities were
pursued in international forums such as G20 and the OECD aiming at fostering a
global dialogue on how to achieve a framework to ensure a sustainable supply of
raw materials.

The second activity report[4] on EU Trade Policy for Raw
Materials of April 2012 provided detailed information about the implementation
of the Raw Materials Initiative in the area of trade policy.

The Commission will continue to monitor
ongoing and future negotiations of FTAs and other bilateral frameworks to
ensure that the issue of raw materials is considered and integrated, where
appropriate.

5.2.        Raw materials dialogues
and diplomacy

In the 2011 Communication, the Commission
stated that the EU will actively pursue a "Raw Materials Diplomacy"
with a view to securing access to raw materials, in particular the critical
ones, through strategic partnerships and policy dialogues.

The Raw Materials Diplomacy aims to engage
with partners though strategic partnerships and policy dialogues to exchange
information and work together to address the challenges on raw materials'
markets. This path has been pursued with the United States, Japan, Russia,
Argentina, Brazil, Colombia, Mexico, Uruguay, Greenland, China and countries of
the Union for the Mediterranean while further dialogues are in preparation.

5.2.1.     United States

On 29 November 2011, the Transatlantic
Economic Council (TEC) agreed to a Raw Materials Work Plan, which includes
preparation of a joint inventory of mineral raw materials data and analysis
maintained by both sides. As part of this effort, the two sides were instructed
to consider the results of ongoing European Commission and United States
Government studies of raw materials resource availability, trade flows, and
criticality and of other supply and demand analyses, such as the 2010 European
Commission report by an ad-hoc expert group[5]
on critical raw materials and the strategy of the U.S. Department of Energy on
critical materials. The TEC Innovation Action Plan[6] has been launched in the area
of raw materials, covering different policy aspects including trade and
substitution.

An EU-US Expert Workshop on mineral raw material
flows and data was held in Brussels on September 2012. The workshop compared
information available to both jurisdictions in terms of primary and secondary
raw materials, compared methodologies for review of the critical raw material
list and discussed areas where material flow information is insufficient. The
European Union and the United States will further explore steps to create a
joint raw materials data inventory and other means to share raw materials data
in the context of current policies on both sides to enable reliable and diverse
raw materials supplies.

The European Union and the United States
are looking to define areas in which the recycling of used electronics can be
improved, particularly when that recycling can address resource scarcity of
critical materials and lessen the impact on the environment throughout the life
cycle of the electronics. In October 2012 a conference on “Best Practices in
Management and Stewardship of Used Electronics” in Washington brought together
the representatives of the U.S. Government and the European Commission as well
as European and American companies and trade associations to explore new paths
for transatlantic co-operation in the area of electronic waste management.

5.2.2.     Japan

Two workshops took place in Washington in
October 2011 and in Tokyo in March 2012 with a focus on research in the area of
raw materials, particularly substitution. The next trilateral meeting between the
EU, US and Japan with government representatives, the European Commission and
industry delegations will take place on 29-30 May 2013 in Brussels. The focus
this year will be on the development and implementation of new models in
efficient management of critical materials.

5.2.3.     Russia

The meeting of the industrial policy
dialogue sub-group between the Russian government and the European Commission
with industry delegations took place in October 2012 in St Petersburg. The Commission
gave an overview of the latest developments in raw materials policy as well as
an update on industrial policy.

5.2.4.     Latin America

In 2011 Vice-President Tajani signed
Letters of Intent to launch bilateral co-operation on raw materials with Chile
and Uruguay and issued a joint press release with Argentina. Letters of Intent
were also signed with Columbia and Mexico in May 2012.

The implementation of the Memorandum of
Understanding with Uruguay was further discussed in September 2012. Local
contact points were appointed. Both sides agreed to exchange best practice and
develop a roadmap for concrete actions to strengthen mutual
co-operation in particular in the areas of geological knowledge, green economy and
energy efficiency, recycling, transparency, training, sustainability,
innovation, etc. Uruguay was offered to participate as observer in the European
Innovation Partnership.

5.2.5.     Euro-Mediterranean
countries

Memoranda of Understanding between the
Commission and Morocco and Tunisia were signed in November 2012. A workshop on
raw materials in the context of the Euro-Mediterranean industrial co-operation
took place in October 2012 with the countries of the Union for the
Mediterranean.

5.2.6.     China

The Commission is engaged in two dialogues
related to raw materials with China - with the NDRC (National Development and
Reform Commission), a Metals Working Group and with the Ministry of Industry
and Information Technology (MIIT). The latter dialogue takes place within a
Working Group on Raw Materials established in 2010.

The last meeting took place in March 2012
in Beijing, and the following is to take place in the second half of 2013 in
Brussels. A workshop on recycling and a study visit for Chinese experts in
Europe should also take place in the second half of 2013.

5.2.7.     Greenland

Greenland, as Europe's closest resource-rich
neighbour, possesses significant reserves of rare earths. In June 2012, the
Commission signed a Letter of Intent on co-operation on raw materials with the Greenlandic
Government. Both Greenland and the European Union agreed to work together to
establish a formal cooperation on raw materials thereby extending the current
good cooperation in the framework of the EU – Greenland Agreement.

The letter of intent proposes for areas of
co-operation: geological knowledge; analysis of infrastructure and investment
needs related to the exploitation of mineral resources; competence building; environmental
issues related to mining and social impacts of mining.

The letter also recognizes the importance
of fair competition conditions and market access in order for the co –
operation to be mutually beneficial.

To follow-up on the dialogue established by
this Letter, a workshop with European industry, both the mining industry and
end-user, took place in September 2012 to discuss the potential of co-operation
with Greenland. A workshop between the Commission and the government of
Greenland took place on the same day to discuss the future of this dialogue and
agree on concrete projects.

6.           Development policy

Sustainable mining can and should
contribute to sustainable development. The EU’s development policy also has an
important role to play in Raw Materials Diplomacy, building win-win situations
for developing countries and the EU in the area of raw materials.

6.1.        Joint Africa-EU Strategy and
ACP framework

In the context of the Strategic Partnership
between Africa and the EU, both sides agreed to intensify their co-operation in
the area of raw materials. The College to College meeting between the African
Union Commission (AUC) and the European Commission (EC) in June 2010 identified
the basic principles for joint work which were endorsed by the III. EU-Africa
Summit in in November 2010 and integrated in the Action Plan 2011-2013.

The bilateral co-operation between the AUC
and the EC on raw materials and development issues is based on the EU Raw
Materials Initiative and the African Union policy on mining and minerals, the
2009 'African Mining Vision'[7].
The co-operation focuses on three areas: governance, investment and
infrastructure and geological knowledge and skills. The Commission and Member
States work jointly on these issues. The EU remains open to requests from
African countries within the framework of development policy programs. At this
stage, no specific requests have been received under regional or national
programming. Furthermore, the Commission intends to promote EU-Africa
cooperation in this critical area through the new Pan-African Program under the
DCI as proposed within the new Multi-annual Financial Framework 2014-2020.

The Commission recognises the crucial role of
good governance for the sustainable use of natural resources as an engine of
growth for Africa and in this vein delivered a capacity building workshop at
technical level on mining taxation in Addis Ababa in December 2011. The
conclusions of the Workshop were presented during the African Union Mining
Ministerial in December 2011. In agreement with the African Union, the
Commission plans to organize a second edition of the Mining Taxation Workshop
in 2013 subject to availability of funds within the African Union budget. The
joint conference also identified a need for a capacity building project on
contract negotiations.

At political level, a High-Level Conference
on the EU-Africa Partnership on Raw Materials - Translating Mineral Resource
Wealth into Real Development for Africa took place in January 2012 in Brussels.
The conference created the political momentum for the implementation of the
Joint Strategy’s Action Plan 2011-2013 on raw materials and engaged all
stakeholders in this process. It delivered recommendations for implementation
in all three areas of co-operation.

The Commission committed in its RMI to
continue to assess – with African countries – the feasibility of assisting
further co-operation between both continents' geological surveys and to promote
co-operation in this area in multilateral forums such as UNESCO's Geosciences
Programme. Following the conference recommendation in this area to strengthen
the co-operation between the African and European geological surveys, a scoping
study on this subject is foreseen to commence in 2013. Its aim is to establish
joint projects to improve knowledge about African deposits, set up a network
for delivery of trainings to the African surveys as well as for exchange and
digitalisation of data. The European geological surveys have a crucial role to
play in this process.

The European Investment Bank is actively
present in the mining sector in the framework of the ACP Investment Facility.
However, due to the recent downturn in the mining cycle for some minerals and
the pressure from the NGOs, the Bank has been more selective in its choice of
projects to be financed, carefully assessing the merits of each one identified
with due regard given to environmental and social aspects[8].

6.2.        Promoting financial
transparency

In the 2011 Communication the Commission
made a commitment to "promote more disclosure of financial information for
the extractive industry, including the possible adoption of a
country-by-country reporting requirement"[9].
On 25 October 2011 the Commission adopted a legislative proposal requiring the
disclosure of payments to governments (e.g. corporate income taxes, royalties,
fees, production entitlements, bonuses and other material benefits) on a
country and project basis by listed and large unlisted companies with
activities in the extractive (oil, gas and mining) and logging of primary
forest sectors. Following discussions within both the Parliament and Council,
and a number of trilogues among the latter and the Commission, a political
agreement has been reached now for the adoption of the corresponding
legislation.

The Commission also proposed in 2010 Tax
and Development Communication and its 2011 Communication to enhance European
financial and political support for the Extractive Industries Transparency
Initiative (EITI), and help developing countries implement it.

The EITI is a global standard that promotes
revenue transparency in resource-rich countries, requesting companies to
publish payments to governments and governments to publish the revenues
effectively received from companies, thus enhancing transparency and aiming to
reduce tax avoidance and corruption in extractive activities. This is
particularly important as developing countries often finance an important share
of their budget from these activities and as the potential for future revenues
remains high in times of globally increasing scarcity.

The EITI brings together country stakeholders
from government, civil society, oil, gas and mining companies and investors into
a national Multi-Stakeholder Group. This unique set-up is an excellent example
of how to pursue better governance[10].

The EU supports the EITI, both politically
and financially. The Commission is a member of the EITI board and encourages
countries rich in natural resources to join the initiative. Financially, the EU
has funded directly some EITI capacity building activities, such as the
bi-annual EITI National Co-ordinators Meetings, which allows for peer to peer
reviews and capacity building of the National Co-ordinators. Furthermore, the
EU contributes to the World Bank-administered EITI Multi-Donors Trust Fund
which fulfils two important aims: (i) it assists countries to accede to the
EITI or to maintain their status as compliant countries; (ii) it helps civil
society organisations to contribute more effectively to this transparency
effort and how to put to good use the information obtained through the
disclosure of tax payments.

6.3.        Promoting supply chain
transparency

In the 2011 Communication, the Commission
recognises that many of the raw materials which the EU imports are produced in
a few countries, some of which are subject to low political and economic
stability[11].

In the same 2011 Communication, the
Commission also proposed to "examine ways to improve transparency
throughout the supply chain and tackle, in coordination with key trade partners,
situations where revenues from extractive industries are used to fund wars or
internal conflicts".

The Commission is closely involved in international
efforts to address the issue of conflict minerals and strongly supports the
OECD's Due Diligence Guidance on Responsible Supply Chains of Minerals of
Minerals from Conflict-affected and High Risk Areas. The Commission also
participates in the meetings of the ICGLR (International Conference on Great
Lakes Region)-OECD-UN Group of Experts on Due Diligence for Responsible
Sourcing the 3Ts (tin, tungsten and tantalum) and Gold Supply Chains and also
encourages the industry to implement the guidance.

The International Taskforce on illegal
exploitation and trade of natural resources in the Great Lakes Region was
reactivated in May 2012. The Taskforce provides the international community and
the OECD Secretariat with a platform for discussion.

As regards traceability of minerals, the
Commission is exploring ways of improving transparency throughout the supply
chain, including aspects of due diligence, thereby building on the experience
of the well-established Kimberley Process, the EITI, the Forest Law
Enforcement, Governance and Trade (FLEGT) Action plan and the Timber
Regulation. The Commission is also exploring ways to provide political and
financial support to the "Regional Initiative on Illegal exploitation of
Natural Resources" of the International Conference for the Great Lakes
Region which includes the set-up of a mechanism aiming at certifying conflict
free minerals sourced in the region. This process is part of a broader
comprehensive response to contribute to curb the link between the financing of
armed groups and the exploitation of natural resources in the Great Lakes
region which also includes EU support to the use of the OECD due diligence
guidance for responsible supply chains management. An exploratory workshop to
address due diligence and explore possible EU action took place in December
2012 Moreover, the Commission launched a public stakeholder consultation in
March 2013 to get interested parties' views on a potential EU initiative for
responsible sourcing of minerals coming from conflict-affected and high-risk
areas – for example, war zones, post-war zones, and areas vulnerable to
political instability or civil unrest. The Commission will use the results of
the public consultation to decide whether to complement and/or support in a
reasonable and effective manner on-going due diligence initiatives on responsible
sourcing of minerals. Any EU action in this field must also take into account
the administrative cost burden for the industry to avoid withdrawal of
operations from those countries.

7.           Fostering sustainable supply within the
EU (Pillar 2)

7.1.        Facilitating Exchange of
Best Practices

The Commission acts mainly as a facilitator
for the exchange of best practice as many of the areas related to extractive
industries fall within the competence of the Member States.

In the 2011 Communication the Commission
considered that the following practices are particularly important in promoting
investment in extractive industries:

–
defining a National Minerals Policy, to ensure
that mineral resources are exploited in an economically viable way, harmonised
with other national policies, based on sustainable development principles and
including a commitment to provide an appropriate legal and information
framework;

–
setting up a land use planning policy for
minerals that comprises a digital geological knowledge base, a transparent
methodology for identifying mineral resources, long term estimates for regional
and local demand and identifying and safeguarding mineral resources (taking
into account other land uses) including their protection from the effects of
natural disasters;

–
putting in place a process to authorise minerals
exploration and extraction which is clear, understandable, provides certainty
and helps to streamline the administrative process (e.g. the introduction of
lead times, permit applications in parallel, and one-stop-shop when the Member States'
system allows for it).

Following the launch of the Commission's
Raw Materials Initiative in 2008, an increasing number of Member States (such
as France, Germany, Finland, Greece, the Netherlands and recently Portugal)
have been developing national strategies, which can be considered as
complimentary to the EU raw materials strategy.

In 2010 the Commission also provided
guidance on how extraction and the protection of sensitive ecosystems can take
place by issuing the Guidelines on Non-Energy Extractive Industry (NEEI) and
Natura 2000[12].
Regarding monitoring of the progress of NEEI and Natura 2000 guidelines,
appropriate indicators were included in a proposed set of indicators.

The Working Group on the exchange of best
practices in land use planning, permits and geological knowledge sharing was
set up in 2009 in order to encourage improvements of the current framework
relating to the activities of extractive industries. The Working Group produced
a report on the exchange of best practice in minerals policy, land use
planning, permits and geological networking in June 2010.

The Commission proposed to "assess
with the Member States, in full respect of the subsidiarity principle, the
feasibility of establishing a mechanism to monitor actions by Member States in
the above area, including the development of indicators".

The indicators proposed by the Commission
cover the following areas:

–
National Minerals Policy indicators (legal
framework indicators and information framework indicators)

–
Land Use Planning indicators

–
Authorisation and Permits indicators including
the application of the Guidance on NEEI and Natura 2000.

The indicators shall enable the Commission
and Member States to assess the current situation and identify areas where
improvement will be appropriate on a voluntary basis. On the basis of the
responses received from the Member States to the proposed indicators the
Commission will proceed to propose a set of indicators to be regularly
monitored. The questionnaires with indicators were sent to Member States, and
preliminary results of replies were discussed at the RMSG meeting in November
2012. The majority of Member States have responded, as well as other countries,
regions and industry. In-depth analysis and evaluation is taking place. The
results will be presented in mid-2013 and will provide input to the EIP.

7.2.        Enhancing
EU knowledge base

The Commission proposed to assess with the
Member States the scope for increased synergies between national geological
surveys that would allow for economies of scale, reduced costs and increased
potential to engage in joint projects (e.g. harmonised minerals database,
European Raw Materials Yearbook). In the medium term, any synergies should
contribute to an improved European raw materials knowledge base in a
co-ordinated way, in particular taking into account the official road map and
progress in implementing the European Spatial Data Infrastructure (as defined
by the Directive 2007/2/EC – INSPIRE) by all EU Member States as well as future
opportunities within the Copernicus programme.

Fulfilling its commitment to "further
enhance the knowledge base necessary for an efficient raw materials
strategy" the Commission launched several studies and research projects.

7.2.1.     Availability
of data on resources and reserves

Since data on mineral resources is included
in the data scope of the INSPIRE directive access, availability as well as
comparability of data/information related to mineral reserves, resources and
endowments in the EU Member States should be improved by 2020.

Meanwhile due to the unavailability of the
data on resources and reserves of primary raw materials within the remit of
EUROSTAT and the need to collect this data directly by the Member States'
national geological surveys the Commission launched a study on structured
statistical information on the quality and quantity of the EU raw materials
deposits. The study will identify the gaps and steps to be taken to reach an
agreement between the national authorities to achieve interoperable coherent
and consistent data. The synergy between the results of the study and with
benefits of relevant parts of INSPIRE will be sought in order to improve the
availability of information on key raw materials to policy makers and decision
makers at Member States and EU level to the benefit of the competitiveness of
EU extractive industries. The study will provide also
data to be published in the frame of the Natural Resources Data Centre,
operated by Eurostat.

7.2.2.     Innovative
Technologies and Possible Pilot Plants

The EIP Communication foresees amongst its
medium term (2014-2020) goals to enable up to 10 innovative pilot plants for
raw materials extraction, processing, product design and recycling. The study
“Raw Materials: Study on Innovative Technologies and Possible Pilot Plants”
(RAMINTECH) will map the potential for relevant pilots in the EU which have the
potential for significantly-improving sustainability and supply of raw
materials along the entire value chain and analyse gaps where the EU needs to
build up a competence.

This long-list will be collected through an
intensive search among stakeholders from the relevant areas in the so-called
collection phase. The project will ensure that the potential of developments in
basic research, which will most likely reach the pre-feasibility status by
2015, is considered. A forecast of solutions of the future (time horizon of
2030) will be indicated.

The project will develop a set of criteria,
indicators and methodologies to allow a matrix analysis of the long-list of
proposed pilot plants that ensures a fair and transparent selection procedure.
These criteria include methods to estimate the impact of pilot actions on
access, acceptance, sustainability and safety and will form the basis for the
(web-based) questionnaire that has been distributed among stakeholders in order
to enable them to suggest innovative technologies and pilot plants.

In-depth analyses of (approximately) 10
selected pilot areas/types with illustrative examples will be provided. Analyses
will include at least three technologies for each of the key areas as
identified for further analysis in detail as case-studies (analysis of the
steps needed to commercialize the outcome of a selected pilot plant and the
benefits to society (including benefits to SMEs).

7.2.3.     European
Rare-Earth Competency Network

Rare earth elements (REE) are vital inputs
for the EU economy, and are particularly crucial for the development and
production of modern high-tech and environmentally-friendly goods such as
electric cars, photovoltaics or energy efficient light bulbs. Since global
demand is growing and rare earths are difficult to substitute or to recycle,
Europe is facing multiple challenges to ensure its security of supply. Starting from 2013, import data on the most critical raw materials
for wind energy (magnets in the turbines), neodymium and dysprosium, are
collected for the purpose of official statistics by means of new special
statistical codes in the customs tariff.

On the request of the European Parliament
the Commission launched a call for seeking professional support to establish
the European Rare-Earth Competency Network (ERECON), a network that should
bring together experts from Europe's universities, research institutes, policy-makers,
think tanks, industry and experts from outside the EU in order to advance
exchange of best-practice on REE, increase the understanding of the special
properties of REE, make recommendations on research and promote the sustainable
mining, recyclability and substitution of REE.

The main purpose of ERECON should therefore
be to provide a framework that would enable participants to effectively
contribute with their knowledge and expertise to discussions on rare earths in
the above fields. ERECON should aim to ensure in depth understanding of the
recycling and substitution of rare earth materials, but also covering aspects
of their value chain, including exploration, extraction, processing, and
refining, which are relevant to the sustainable supply of the EU.

The ERECON project is expected to facilitate
open and wide-ranging discussion among experts by establishing the appropriate
organisational structures and meeting opportunities, to create a network of
excellence, synergies and cross-disciplinary exchange in order to enhance
knowledge on the most efficient use of rare earth elements as well as REE
mining and refining.

The Commission will launch an ERECON network
of excellence and interdisciplinary alliance in the first half of 2013. The
Network should be active for roughly two years, during which four expert
working groups will meet at different workshops to discuss REE mining, REE as
process enablers and REE in key applications.

7.2.4.     Research
projects

Research and development in the area of raw
materials is supported by the EU's 7th Framework Programme with nearly € 200
million both from the Industrial Technologies and the Environment Programme as
well as the Socio-economic Sciences and Humanities Programme. Over € 60 million
are already running projects.

The ProMine research project has improved
the geological knowledge base and has provided some additional information on
Europe's primary raw materials potential.

The EuroGeoSource research project provides
harmonised spatial geological and geographical data sets fully utilising
(testing) the draft of the INSPIRE legally binding data specifications on
Mineral and Energy resources as well as the INSPIRE web based, distributed
infrastructure.

Both initiatives provide information of
importance for land use planning and strategic planning for long term decisions
– such as investments in mining and the efforts needed to complete the permit
process – rely on the quality and availability of data.

ProMine and I2MINE projects are operational
in the area of mining, extraction and handling of raw materials. The EURARE
project concerns rare earths exploration and exploitation and a cluster of
projects related to rare earths recycling for high tech waste streams are under
negotiation (projects RECLAIM, REMANENCE, RECYVAL NANO).

The main focus in the materials related
projects is on the reduction and substitution of rare earth elements (DRREAM,
ROMEO, NANOPYME, and REFREEPERMAG) and platinum group metals (FREECATS and
NEXT-GEN-CAT).

In 2013 the following projects will become
operational: “Mineral Extraction and Processing in Extreme Environments (Deep
sea/ Arctic Regions)”, and the” European Intelligence Network on the Supply of
Raw Materials”. Currently three materials research projects on the substitution
of critical materials involving coordinated activities with Japanese teams are
under negotiation.

The Commission carries out dedicated
studies to support the development of the EU raw material strategy through the
work programme of its Joint Research Centre (JRC) focusing in particular on
security-of-supply issues in product supply chain and end-of-life management
options, including through eco-design and in 2012, a workshop focused on
methodological aspects for supply chain sustainability assessment.[13] Furthermore in 2011, a report
was published[14]
that assessed the raw materials needs of the energy sector for the
implementation of the European Strategic Energy Technology Plan, which
identified the critical metallic elements, the supply of which if disrupted
could limit the exploitation of renewable energy sources. A follow-up study
with a broader scope will be published by the JRC in Summer 2013.

The Commission also facilitates the
interaction between stakeholders within five European Technology Platforms:
Sustainable Mineral Resources (ETP-SMR), Manufuture (Manufacturing), EuMaT
(Advanced Materials), SusChem (Sustainable Chemistry) and Forest-Based
Industries (FTP) Construction (ECTP).

The ERA-MIN network on raw materials is
operational since November 2011 with the aim of improving involvement of Member
States authorities and also national stakeholders. CRM_Innonet (a FP7 funded
coordination action) was launched on 1 November 2012. This network is a
dynamic, open networking initiative to facilitate dialogue and exchange of
ideas and to promote synergies in the field of substitution of critical raw
materials.

7.3.        Promoting Research and
Skills

Recognising the pivotal role of research
and skills in addressing Europe's raw materials challenges the Commission
committed to "continue to support the creation of sectoral skills'
councils at European level when an initiative comes from stakeholders such as
social partners or the relevant observatories and promote research and
development in the raw materials value-chain including extraction, processing,
recycling and substitution".

In the context of Horizon 2020, it is
expected that raw materials will be reflected as a societal challenge, with a
dedicated budget.

In the framework of the European Institute
of Innovation and Technology (EIT), the Commission included raw materials on
the future Strategic Innovation Agenda of the EIT for 2014-2020 and as a topic
of one of the future Knowledge and Innovation Communities (KICs), to be
launched in 2014.

Co-operation with key technology driving
economies is supported under the TEC Innovation Action Partnership with the US.
Moreover, two trilateral EU-US-Japan workshops have taken place: one in
Washington in October 2011 and one in Tokyo in March 2012, with the purpose of
exploring opportunities for common approaches in the area of research on raw
materials, with a particular focus on substitution.. The Third EU-US-Japan
Trilateral Conference on Critical Materials will take place on 29-30 May 2013
in Brussels. It will focus on the development and implementation of new models
in efficient management of critical materials.

The EIP Communication includes research and
skills objectives.

8.           Boosting resource efficiency and
promoting recycling (Pillar 3)

8.1.        Better Implementation and
Enforcement of Existing EU Waste Legislation to Promote Recycling & Resource-efficiency

In the 2011 Communication, the Commission
proposed to:

–
review the Thematic Strategy on waste prevention
and recycling to develop best practice in collection
and treatment of key waste streams, in particular those which contain raw
materials with a negative impact on the environment. When necessary, the
availability of recycling statistics will be improved;

–
support research and pilot actions on resource
efficiency and economic incentives for recycling or refund systems;

–
carry out an ex-post evaluation of the EU waste
acquis, including an assessment of areas where legislation in the various waste
streams could be aligned to improve coherence. This would include the
effectiveness of deterrents and penalties for breaches of EU waste rules;

–
review the action plan on sustainable
consumption and production to identify what additional initiatives are
necessary in this area;

–
analyse the feasibility of developing eco-design
instruments (i) to foster more efficient use of raw
materials, (ii) ensure the recyclability and durability of products and (iii)
promote the use of secondary raw materials in products, notably in the context of the Ecodesign Directive[15]; and

–
develop new initiatives to improve competitiveness
of EU recycling industries notably by introducing new market based instruments
favouring secondary raw materials.

The Commission also included sustainability
issues – including waste – in the new integrated industrial policy[16].

The Commission launched in 2012 a 'fitness
check' of five waste stream directives and waste management targets.

The methodology for the preparation of
Ecodesign Regulations for energy-related products (MEErP) is being currently
reviewed in order to strengthen resource efficiency aspects. The Ecodesign
Directive allows setting product requirements for those environmental impacts
which are found to be significant. To support this analysis, the Commission's JRC recently developed and applied multi-criteria
methods for the assessment of resource efficiency, focusing on reusability,
recyclability, recoverability, recycled content, use of priority resources and
durability.[17]

8.2.        Strengthen
the Enforcement of the Waste Shipment Regulation

The problem of environmental dumping of
waste products also occurs in case of illegal shipments of waste to third
countries. During a co-ordinated inspection campaign throughout 2008-2011
involving 22 European countries, the European Union Network for the
Implementation and Enforcement of Environmental Law (IMPEL) found that 19% of
inspected shipments were in violation of the EU Waste Shipments Regulation. Of
those, 37% were illegal shipments[18].
The inspections were targeted, so this number is not necessarily representative
for all shipments.

To address shortcomings in the
implementation and enforcement of the Waste Shipment Regulation, in the 2011
Communication, the Commission proposed to:

–
ensure precise and workable inspection standards
for waste across the EU. This will allow for further efforts to facilitate the
control of shipments by customs authorities;

–
consider using FP7 research funding to help
improve technologies for detection, identification, tracking and location of
illegal shipments;

–
examine the feasibility of applying a global certification
scheme for recycling facilities to the export of waste streams, building on
environmentally-sound management criteria;

–
build on IMPEL, work with Member States to
assess the feasibility of a formal EU-level mechanism for the enforcement of
the EU acquis.

As such, in 2011 the Commission consulted
stakeholders and the public on possible EU legislative criteria and
requirements for waste shipment inspections. The Commission is currently
assessing the impacts of possible future legislative and non-legislative
measures to curb illegal shipments of waste.

In order to assess the feasibility of
applying a global certification scheme the Commission launched a study, which
has recently been finalised. Waste exports are subject to the Waste Shipment
Regulation, which defines the obligations and enforcement measures that need to
be taken by Member States and waste exporters so that waste is exported,
transported and treated in an environmentally sound manner. However, there is
currently no mechanism in place for authorities and/or exporters to be able to
demonstrate that the waste exported for recovery will be treated in line with
the Waste Shipment Regulation. The purpose of this study was, therefore, to
provide a detailed description of existing EU, third country and world
standards applying to waste recycling plants and/or to other similar plants, to
evaluate what measures would be necessary to ensure that waste exported from
the EU to third countries is treated in an environmentally-sound manner and to
propose a series of options of how to demonstrate and verify compliance with
Environmentally Sound Management of Waste ESM, outlining advantages and
disadvantages for all stakeholders and authorities directly and indirectly
affected.

The Commission will now assess the best way
forward in close co-operation with relevant stakeholders.

Within the context of international
co-operation with the US under the TEC, one of the five areas for potential
co-operation was co-operation on waste shipment and recycling. A workshop under
TABD (Trans-Atlantic Business Dialogue)/TEC took place in Washington in October
2012 on "Best Practices in Management and Stewardship of Used
Electronics".

The Commission plans to organise a workshop
on "Best practices to stop illegal shipments of waste-a role model
exercise between three main harbours (Antwerp, Rotterdam, Hamburg)".

Research funding from the 7th
Framework Programme to help improve technologies for detection, identification,
tracking and location of illegal shipments has been used to commission a study
which will include both technical and non-technical research to detect and
locate illegal shipments.

9.           Thematic Annual Event and coordination

The Commission committed to hold regular
public discussion through an annual thematic event that would promote the
awareness of the challenges ahead and take stock of the progress made[19].

In 2011 the annual thematic event was
devoted to development policy aspects of the Raw Materials Initiative. The High
Level Africa-EU Conference on Raw Materials took place on 26 January 2012.

The thematic annual event in 2013 will be
devoted to the European Innovation Partnership.

[1]               Critical
Metals in Strategic Energy Technologies: Assessing Rare Metals as Supply-Chain Bottlenecks in
Low-Carbon Energy Technologies, R.L.Moss, E.Tzimas, H.Kara, P.Willis and
J.Kooroshy, European Commission, Joint Research Center, Institute for Energy
and Transport, 2011.

[2]               Communication from the Commission to
the European Parliament, the Council, the European Social and Economic
Committee and the Committee of Regions "Making raw materials available for
Europe's future well-being. Proposal for a European Innovation Partnership on
Raw materials" (COM(2012) 82 final).

[3]               Communication from the Commission to the European
Parliament, the Council and the European and Social Committee and the Committee
of Regions "Trade, growth and development.
Tailoring trade and investment policy for those countries most in need", COM(2012) 22 final.

[4]               "EU Trade Policy for Raw Materials, Second
ActivitiyActivity Report", European Commission, Directorate-General for
Trade, May 2012.

[5]               "Critical raw materials for the EU", Report
of the Ad-hoc Working Group on defining critical raw materials, July 2010.

[6]               Transatlantic Innovation Action
Partnership Work Plan, Transatlantic Economic Council, October 27, 2009.

[7]               Africa Mining Vision, African Union, February 2009.

[8]               566 million EUR under first financial protocol of the
Cotonou Agreement (2003-2008) went to the mining sector which represented 15%
of the initial endowment of the ACP Investment Facility and EIB Own Resources.

[9]               The US adopted in July 2010 a disclosure requirement
(section 1504 of the US Dodd Frank Act) that requires all extractive companies
(e.g. oil, natural gas or minerals) listed on US stock-exchanges to publish
payments made to governments (e.g. royalties, fees, production entitlements,
bonuses, and other material benefits) on a per country-and-project basis. In
order to enforce this legislation, final implementing rules were adopted on 22
August 2012 by the US Securities Exchange Commission (SEC).

[10]             With its focus on the transparency of payments
(corporate taxes, royalties, etc.) by multinational companies to their host
countries, the EITI is doing much in fostering the development agenda. It is
setting the ground for Parliaments and for civil society in countries rich in
natural resources to enquire about, to understand, to assess whether their own
countries receive the payments which they are due.

Currently the EITI is seeking to
strengthen its reporting requirements to further improve the governance in
candidate and compliant EITI countries. This will include among other areas a
description of how extractive industry revenues are allocated (inside and
outside the budget), the disclosure of subnational transfers, contract
transparency (public accessibility) and the introduction of project-by-project
reporting.

With these changes in the
requirements, the EITI increases its role as an important instrument to attain
EU development policy objectives by promoting transparency, domestic
accountability and thus enhancing public and corporate governance in
resource-rich developing countries.

[11]             For one of these increased-risk countries – the Democratic
Republic of Congo – the OECD considers that trade in certain minerals, namely
in tantalum, tungsten, tin and gold, has a potential to exacerbate regional
conflict in specific eastern Congolese regions.

[12]             EC Guidance on undertaking new non-energy extractive
activities in accordance with Natura 2000 requirements, European Commission,
July 2010

[13]             http://lct.jrc.ec.europa.eu/assessment/ResourceSecurity-SecuritySupply

[14]             http://ec.europa.eu/dgs/jrc/index.cfm?id=1410&obj_id=14150&dt_code=NWS&lang=en?

[15]   Directive
2009/125/EC of the European Parliament and of the Council of 21 October 2009

establishing a framework for the
setting of ecodesign requirements for energy-related products.

[16]             Communication from the
Commission to the European PaliamentParliament, the Council, the European
Economic

and Social Committee and the
Committee of Regions, "A Stronger European Industry for Growth and

Economic Recovery - Industrial Policy
Communication Update", COM(2012) 582 final.

[17]             Refined methods and Guidance documents for the
calculation of indices concerning Reusability/Recyclability/Recoverability,
Recycled content, Use of Priority Resources, Use of Hazardous substances,
Durability. Ardente F., Mathieux, F. European Commission, Joint Research
Center, Institute for Environment and Sustainability, 2012 (http://lct.jrc.ec.europa.eu/pdf-directory/Report%203%20-%20Refined%20methods%20and%20guidance%20documents-final.pdf)

[18]             EEA report, "Movements of waste across the EU's
internal and external borders", No 7/2012.

[19]             The Commission established an Inter-Service Taskforce
on Raw Materials, with the aim to guide further implementation of the EU Raw
Materials Strategy. This also corresponds to a call made by the European
Parliament in its Resolution of 13 October 2011. The first meeting of the group
took place on 26 April 2012.